We at Wyndham Capital Mortgage, and everyone else for that matter, have all heard the horror stories regarding adjustable rate mortgages lately, so why is it that they still exist? Why would you want to consider the adjustable rate? Many choose to look at an adjustable rate mortgage as a way to pay a little less now and pay more down the road when he/she/they are “making more money.” Others only see the little picture. Often the interest rates on adjustable rate mortgages are considerably smaller than those on traditional loans, and seemingly appealing.
The problem with both of these ways of thinking is that there is no guarantee that the interest rate will stay at its current level for any given length of time. There is also no guarantee that you or your spouse or significant other will, in fact, be making more money down the line. If nothing else, this poor time in America should teach us that nothing is certain. Look at the number of people that had their retirement savings wiped out by the crash of the stock market. Consider those that had worked for the same company for twenty years or more only to have the company close down, or to be laid off and replaced by a younger person willing to work for far less.
It may be safer to consider adjustable rate mortgages in a different way. Instead of considering the payable interest rate to be the current interest rate, instead think of it being the highest possible rate. Thus, your adjustable rate mortgage can become your savings plan. If you plan to pay the amount due at the highest interest rate, then anything extra can be stashed in a savings account, or you can pay the full amount each and every time toward the mortgage and pay it off in significantly less time. Not only will this help you save for the future, it will also protect you should the interest rate every actually reach that high interest rate. If you want to learn more, consider talking to a professional such as those that work at Wyndham Capital Mortgage.
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